Bishop defended CSR’s asbestos corporate veil

In the same way as Prime Minister
Julia Gillard
’s past as a lawyer has come back to haunt her 17 years later, Liberal deputy leader
Julie Bishop
will hope that the words of CSR personnel manager Norman Irving do not similarly dog her. “Even if the workers die like flies, they will never be able to pin anything on CSR," Irving wrote in an internal memo in April 1977.

While Ms Bishop had no role in advising CSR on its legal strategy during the 1970s, she aggressively prosecuted it 10 years later in a claim brought by former workers Peter Heys and Stephen Barrow.

When confronted with questions about her role as CSR’s lawyer in the 1980s in fighting claims by workers at its Wittenoom asbestos mine, Ms Bishop has rejected any comparison with the questions of probity now confronting Ms Gillard.

Instead, she was a solicitor acting on instructions with the assistance of eminent legal counsel and within the boundaries of the law. Yet, like the AWU case, it highlights less attractive aspects of legal practice.

The history of CSR’s bitter defence against claims by former workers of its Wittenoom mine has strong parallels with James Hardie’s asbestos problems 25 years later.

CSR first became aware of links between asbestos and the cancer mesothelioma in 1960 and in 1975 stripped the assets from its subsidiary Midalco, which had operated in Wittenoom until 1967, when it closed. However, two years later a CSR executive, Ian Burgess, who later became chief executive, noted the company had a “moral obligation" to compensate victims, while company secretary J.F. Blaxland concluded: “There may be evidence of negligence, or what a jury would consider to be negligence".

Yet faced with a claim by a former worker that year, the company’s insurer, SGIO, expressed concern about settling and the knock-on consequences for other claims.

The company sought strategic advice from Freehill Hollingdale & Page. It advised CSR to take rely on Midalco’s limited liability and warned of the danger of the company being seen as standing behind its subsidiary.

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“The philosophy of the CSR group and its executives in their regard to moral and humanitarian obligations towards employees is recognised. Nevertheless, these instincts must be curbed until the situation becomes clearer," Freehills advised.

But CSR also sought the advice of Perth firm Robinson Cox, later to become part of Clayton Utz, and that firm was less confident about the company being able to defend.

The firm went on to act for CSR in 1987 in the Heys case, one of the longest-running pieces of litigation in Australian legal history.

Acting as lawyer for both, Ms Bishop argued CSR had no responsibility for Midalco’s actions and the “corporate veil" could not be pierced. The case ran for 130 sitting days over eight months, during which Heys died.

Eventually the workers’ law firm Slater & Gordon successfully established that CSR was responsible for Midalco, showing that the subsidiary’s directors were senior employees of the parent company and no expenditure of more than $20 could be made without approval of head office.

“It would . . . be completely unrealistic to suggest that [Midalco] controlled its own destiny in any real sense," the WA Supreme Court ruled. But the case was not finished – Robinson Cox appealed and successfully argued that workers’ compensation paid to Heys while he was alive should be deducted from the payout to his estate.